It’s time to buy Dow’s stock, says Deutsche Bank, citing high dividend and belief that ‘earnings bottom’ has passed

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Dow Inc.'s stock rallied Monday after Deutsche Bank said it was time to buy, citing belief that 'earnings bottom' has passed. The stock also has a relatively...

Shares of Dow Inc. rallied Monday after Deutsche Bank analyst David Begleiter said it was time to buy, citing valuation and the belief that the worst for the chemical company’s fundamentals is in the past.

A relatively high dividend yield, which is nearly triple the yield for the S&P 500, means that even if it takes time for market conditions to improve, investors are being “paid to wait,” he said. After the stock tumbled 14.2% over the past two weeks through Friday and sank 17.3% since closing at an eight-month high of $60.51 on Feb. 7, Begleiter said he believes a share price of around $50 “is an attractive entry point.”

And as the largest ethylene producer in North America, Dow is in a good position to benefit from the “strong cost advantage” that U.S. ethane-based ethylene producers have over naphtha-based producers in Europe and Asia, he said. Ethylene is a gas used to make plastics.

 

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